GBP/USD Rallies Then Declines on Testimonies by BoE Members

The GBP/USD currency pair today retreated from its overnight rally after encountering resistance just before the crucial 1.3500 psychological level. The currency pair was on an uptrend from the early European session before reversing in the mid-European session following testimonies by Bank of England policymakers before the UK Parliament’s Treasury Select Committee.

The GBP/USD currency pair today declined from a high of 1.3492 to a low of 1.3412 losing about 80 points.

The currency pair’s earlier rally was mainly fueled by profit-taking investors who were selling the US dollar following its recent rally. The currency pair’s rally was also supported by the release of the UK public sector finances report for April by the Office for National Statistics. Public sector net borrowing came in at £6.23 billion versus the expected £7.1 billion. The testimonies given by the BoE’s Monetary Policy Committee members before the UK Parliament contributed to the pair’s weakness. The dovish comments by BoE Governor Mark Carney had a slightly negative impact on the currency pair.

Fears pertaining to the Brexit process also put a damper on the pound as talks resumed between the UK and EU negotiators. The CBI trends total orders for May also disappointed by coming in at -3 versus the expected +2. The speech by the BoE’s Gertjan Vlieghe before Parliament during his reappointment hearing had minimal impact on the currency pair.

The currency pair’s future performance is likely to be affected by tomorrow’s UK CPI data, and US Markit Manufacturing and Services PMIs.

The GBP/USD currency pair was trading at 1.3439 as at 16:16 GMT having declined from a high of 1.3492. The GBP/JPY currency pair was trading at 149.10 having dropped from a high of 149.73.

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